Question
1. Individual Problems 14-1 Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value
1. Individual Problems 14-1
Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $80. Each of the high-value consumers buys one doll and two accessories and is willing to pay $157 in total.
Mattel is currently considering two pricing strategies:
Strategy 1: Sell each doll for $40 and each accessory for $40 | |
Strategy 2: Sell each doll for $3 and each accessory for $77 |
In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy.
Revenue from Low-Value Customers | Revenue from High-Value Customers | Total Revenue from Strategy | |
---|---|---|---|
$80 Value, 1 Accessory | $157 Value, 2 Accessories | ($) | |
($) | ($) | ||
Strategy 1 | |||
$40 doll + $40 accessory | |||
Strategy 2 | |||
$3 doll + $77 accessory |
The strategy that generates the most revenue is strategy .
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